In the latest evidence that med spa services are increasingly catching the eyes of investors, Heyday has raised a $12 million Series B extension.
The raise was led by existing investor, Level 5 Capital Partners (L5), nearly two years after Heyday’s initial $20 million Series B.
With this capital injection, Heyday, which launched in 2015, plans to invest in franchise expansion and support.
While it has 10 owned and operated salons in New York City, Los Angeles and Philadelphia, the company made the decision to go down the franchise route around 2018 and has seven locations that are franchises. That number is set to rapidly increase next year, with Heyday planning to open more than 30 more franchise locations, with a total of 135 committed franchise units on the horizon in markets including Denver, Boston, Austin, Texas, and Phoenix.
“The cash will get us through to profitability, which for us we see in 2024. With franchising in particular, there’s so many investments you need to make in advance of door openings. We have 30 door openings next year and just given the real estate timetable that’s reasonably a lot so there’s obviously a lot of investments that we made for this year,” said Adam Ross, cofounder and chief executive officer of Heyday, in an interview.
In addition to driving Heyday’s aggressive franchising efforts, the funds will be utilized to propel in-house innovation and the expansion of service offerings, with plans to launch a line of skin care products in 2023, as well as tech advancements, product development and hiring.
Ross added that revenue is now back in line with pre-COVID-19 levels, after the company was hit hard during the pandemic.
“In COVID-19, I don’t think we could have been in a worse industry….People could get Botox, but people couldn’t get facials. It was tough for us — New York doors were closed for seven months, Philadelphia 14 months and Los Angeles 16 months — so [a] long time being closed,” he said. “We were one of those companies that didn’t immediately bounce back to pre COVID-19 levels. It’s been more like month on month on month, but what I can tell you is that our revenue is back in line with pre-COVID-19 levels.”
Of the investment, Chris Kenny, managing partner of L5 Capital, noted: “We’re excited to continue to invest in Heyday given the clear consumer demand signal we are seeing beyond its origin markets of NYC and L.A. Heyday has a clear path to category leadership in coveted consumer segments with 40 premium franchise shops open by the end of 2023 and significant first mover advantage in the service-led skin care segment.”